Daebang Construction Chairman Koo Gyoun and CEO Koo Chanwoo Acquitted in First Trial on Charges of Unfair Support to Affiliates

"Difficult to Evaluate as a 'Transaction on Significantly Favorable Terms'"

Daebang Construction

Chairman Koo Gyoun and CEO Koo Chanwoo of Daebang Construction, who were brought to trial on charges of transferring public housing sites to affiliated companies and channeling massive profits to them, were acquitted in the first trial.

On the 27th, Judge Yoon Youngsoo of the Seoul Central District Court Criminal Division 18 rendered a not guilty verdict for Chairman Koo, CEO Koo, and the Daebang Construction corporation, who were indicted for violating the Fair Trade Act.

Chairman Koo and CEO Koo were indicted on charges of selling six public housing sites, worth approximately 206.9 billion won and acquired by Daebang Construction through so-called "swarm bidding" from 2014 to 2020, at low prices to affiliated companies operated by their son-in-law and others, thereby channeling over 250 billion won in operating profits to those affiliates. These affiliates' construction capability ranking rose vertically from 228th in 2014 to 77th in 2024. In the sentencing hearing held last April, the prosecution requested three years in prison for each of them and a fine of 200 million won for the Daebang Construction corporation.

However, the court did not accept the prosecution's allegations and ruled not guilty. The court pointed out, "Under the Fair Trade Act, regulations on providing business opportunities to specially related parties apply only to 'business groups subject to disclosure,' and at the time of the resale, Daebang Construction was not designated as such a business group."

The court further stated, "Under the Act on the Promotion of Housing Site Development, public housing sites cannot be resold at a price exceeding the original supply price," adding, "It is difficult to evaluate Daebang Construction's act of transferring the sites at the original price or at only a slightly reduced price as a 'transaction on significantly favorable terms' or as 'providing excessive economic benefits.'"

Regarding the affiliates' subsequent profits claimed by the prosecution, the court explained, "The judgment must be based on the time of the support act," and clarified, "Profits gained by the affiliates through housing development projects after the resale are a subsequent result and cannot be considered economic benefits obtained directly from the resale itself."

Meanwhile, prior to this criminal trial, Daebang Construction had already won a final victory in an administrative lawsuit against the Fair Trade Commission, in which it sought to cancel a penalty surcharge of 20.5 billion won.

This content was produced with the assistance of AI translation services.